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Generic Drugs - A grand conspiracy?Steven J. Greenfogel

In 2016, the news that the Department of Justice was investigating the incredible increase in the prices of off-patent generic drugs brought about the filing of several suits accusing pharmaceutical companies of fixing prices on Digoxin and Doxycycline. The news regarding the investigation followed headlines from Congressional hearings that showed that the prices of these drugs, which had been on the market for a long time and could be manufactured by any pharmaceutical company, were suddenly being subjected to massive price increases (some more than 1000%). The DOJ investigation, coupled with a parallel investigation by a multistate task force of State Attorneys General led by the Attorney General of Connecticut, brought a great deal of attention to this unusual pricing behavior.

While most of the civil cases were filed initially in the Eastern District of Pennsylvania, a single filing in the District of Rhode Island required the intervention of the Judicial Panel on Multidistrict Litigation, which centralized all of the Digoxin/Doxycycline cases before Judge Cynthia Rufe in Philadelphia. Shortly thereafter, two executives from Heritage Pharmaceuticals, a small generic manufacturer based in New Jersey, pled guilty to fixing prices and agreed to assist the State Attorneys General in the investigation and prosecution of the companies involved in this illegal activity.

During this same time period, other suits against other manufacturers of different generic drugs were being filed in various federal district courts throughout the Northeast. Once again the intervention of the Judicial Panel on Multidistrict Litigation was sought and the Panel consolidated for pretrial purposes all of the cases before Judge Rufe as the Generic Pharmaceuticals Pricing Antitrust Litigation.

Unlike most other consolidations by the Panel, this MDL consists of allegations of conspiracy involving manufacturers of different products that may be involved in different conspiracies. In other words, there doesn’t appear to be a single overarching conspiracy to fix prices, but rather many different conspiracies affecting many different pharmaceuticals. The closest analogy to this situation is the Auto Parts litigation, consolidated by the Panel in Detroit before Judge Battani. There, more than a half dozen conspiracies have been alleged involving separate products and separate manufacturers. The only thing tying the case together is that the focus of the conspiracies involved the auto industry.

The same seems to be true for the Generic Pharmaceutical cases. How the Court will choose to move the litigation forward with so many different products and manufacturers will be interesting to watch. Will there be subclasses set up for each different product? Or can the Court set out a single class combining all purchasers into a single group? Will separate tracks for discovery have to be set up? Will different damage models be needed for each of the products subject to the conspiracy claims? Will different experts be needed by plaintiffs to opine on the conspiracy, impact and damage issues that are so important to proving an antitrust conspiracy case? Can the case be tried in a single forum before one jury, or will it be necessary to try separate cases for each product before different juries?

Even without having to deal with the myriad questions regarding direct and indirect purchasers and various issues of the application of both federal and state statutes to the claims alleged, this might be a daunting task for many jurists. However, as Judge Battani has shown in the Auto Parts MDL, these issues can be handled very successfully in a single forum with the appropriate cooperation between counsel and the Court. Apparently, the Panel agrees. We will watch with great interest to see how Judge Rufe deals with this most complex of cases.